Tejas Derisking India's SMEs from $15B in Annual Losses, with BimaKavach

The cost of being uninsured

India is exposed to many natural catastrophes such as earthquakes, wildfires, cyclones and droughts. According to Swiss Re, the average annual economic loss over the last decade (2013-22) was $8B (inflation-adjusted), 125% higher than the previous decade's average.

According to another report by Indusface, Indian enterprises faced over 5B+ cyberattacks in 2023, with 90% of the firms operating in banking, finance and insurance facing at least one bot attack. India Inc’s legal expenses outpaced revenue growth over the last five years, amounting to $9B in FY23 (+23% YoY)

Despite incurring such staggering losses, India’s non-life insurance penetration is low, at 1%, compared to 3.7% globally. Swiss Re estimates that as much as 93% of such risk exposures are uninsured. MSMEs in India are further inundated with losses from machinery malfunction in factories leading to employee injury/death, accidents and spillages that destroy goods in transit and fire hazards that destroy a bulk of on-premise assets.

To prevent such losses from causing a huge economic dent in the businesses, MSMEs need to prioritize business insurance that covers both physical damage as well as revenue loss due to business interruption.

However, small business owners lack the awareness of such risk transfer mechanisms available to them. Also, they frequently tend to underestimate the economic impact of damages associated with these adverse events.

Moreover, general business insurance is often inaccessible. Lack of credit history of the proprietors, high cost of premiums and underwriting challenges on the part of insurers are among some of the major reasons leading to low insurance uptake.

Tejas Jain, founder of BimaKavach, wanted to tackle the challenge of deepening business insurance penetration. BimaKavach steps in to fill this gap as the one-stop shop for purchase and advisory related to all business insurance products, from covering third-party liabilities arising from business operations (commercial general liability insurance) to group gratuity and term life insurance for all employees of an organisation.

All tangible risks to businesses, in the form of visible, physical losses due to fire, burglary or in transit are covered by BimaKavach, along with intangible losses arising from cybercrime and negligence /malpractices while providing professional services.

Tejas hails from a family where the last three generations were engaged in the expansion of life insurance and general insurance in India. Before launching BimaKavach, Tejas gained experience as an IRDA licensed agent at Bajaj Allianz General Insurance. This experience provided him with invaluable insights to help him zero down on his ideal customer segment.

Tailor-made products for the new-to-insurance segment

78% of all liability and property policies sold by BimaKavach in FY24 were first-time purchases by SMEs who were new to insurance. They did not have any prior insurance purchase history.

This demonstrates that although India’s commercial insurance market is $5.1B in size, there exists a wider blue ocean of unserved SMEs who are new to insurance. These clients primarily reside outside the metropolitan cities in India and typically exist under the radar of the structured insurance broking industry.

Given the asymmetric geographical location of these clients, physical interactions and local presence are difficult. To address this limitation, BimaKavach pioneered digital distribution, by bolstering its online presence.

As a result, 90% of all its new clients are digitally acquired. These clients had landed on BimaKavach’s website while searching online for insurance or called their helpline. BimaKavach is well-equipped to serve clients in remote, Tier 2+ towns, without having to set up any physical presence in those areas.

Asset-heavy businesses, consisting of clients with heavy capex investments in machinery, inventory and factories, account for 77% of BimaKavach’s client base. More than 50% of BimaKavach’s client base is directly involved in manufacturing, engineering and construction activities.

Sole proprietorships constitute more than 55% of the businesses insured by BimaKavach. They represent not only the underinsured, but also the underbanked segment of the society. Many of these businesses are new to insurance, and before BimaKavach, they had no avenue of buying any insurance.

Innovating the core insurance product to achieve 99%+ client retention rate

Business insurance policy coverages are highly technical. Typical middlemen, local agents and small-time brokers take a lot of time to understand the requirements of their customers and draft precise quotations, inadvertently delaying policy issuances. Moreover, they’re not adept at claim settlements in the event of a catastrophe, leading to low claim settlement ratios and dissatisfied customer experience from the process.

Tejas and his team at BimaKavach took an SME-first approach by co-creating pre-underwritten products with reinsurers. These off-the-shelf policies cover standardised risks, reducing lengthy documentation processes to answering just seven online questions. The underwriting process is heavily automated, which reduces the purchase TAT and results in instant policy issuance.

Businesses can insure their property and inventory worth $200K, against losses arising from incidents of damage by fire, for as low as $60 annually. Companies can protect all their Directors and officers from personal financial losses (arising from legal protection, lawsuit costs and settlements) of $100K at an affordable premium of $200 per year.

Even a million dollars in damages associated with crippling cyber attacks can be insured with cyber insurance that come as sachetised offerings from BimaKavach, for $10K in premium only.

To prevent miss-selling of insurance, BimaKavach introduced greater transparency and ease of understanding the risks covered and their corresponding pricing. The instant pricing and quote-generation process embedded in the platform eliminated the need for constant back and forth between the insurance agent, insurer and the customer.

By reducing the risk of significant financial losses, BimaKavach is unleashing the spirit of entrepreneurship and economic growth. It contributes to job creation and overall sustainability and stability of MSMEs, by helping them manage and mitigate risks effectively.

So far, BimaKavach has insured 2,250+ clients with a 99.7% retention rate. Today, BimaKavach issues 750+ policies to more than 250 new clients monthly, collecting $300K in gross written premium (GWP).

Steering Local Vehicle Repair Shops to Safety

Sachin Hajare grew up in Wadki, a small town on the outskirts of Pune. Both of his parents are farmers, growing sugarcane in the fertile black cotton soil irrigated by rivers originating in the Sahyadris. After graduating, he worked at a local auto garage and repair shop for several years, before saving up enough to start his own shop in 2019. He named the shop after his beloved niece, Yash.

Sachin wanted to insure his inventory of spare auto parts that were stocked up in the garage. In April 2024, he went online and searched for fire insurance. He landed on BimaKavach’s website and subsequently answered a few simple questions to lock in his policy, for $32.

Sachin’s policy copy was delivered to his email inbox within two days from the date of enquiry. For Sachin, it was business as usual after that. However, one fateful day, a short circuit led to a fire breaking out in his shop, that destroyed his stocked-up inventory worth ~$10K. For Sachin, that was a quarter of a year’s turnover, all decimated at once.

Frantic for help, a distressed Sachin called up BimaKavach, who immediately sprang to action. The team reassured Sachin that the losses would be compensated from his insurance, and assisted him with the next steps. After the claim was raised, the BimaKavach Customer Service team kept him abreast of the progress in the claim settlement journey. The team’s responsiveness, proactive information sharing and good rapport with the insurer ensured that the insurance payout was credited to Sachin’s account within 45 days of the incident.

For many such small business owners, a fire of this scale would have wiped out all the family savings and plunged them into debt. But for Sachin and his family, it was just the start of a long fruitful relationship with BimaKavach.

“I’d recommend all shop owners to trust BimaKavach with protecting their establishments. They were swift with processing my claims, and was extremely helpful all throughout. Take your insurance policies from BimaKavach, and stay safe”

Insuring Solar Projects Against the Cloudy Days

Shrikant Meshram is a first-generation entrepreneur. He started a solar power EPC (Engineering, Procurement and Construction) company named Variate Consultants Private Limited along with a few of his business partners, based out of Pune. India was pushing hard into the renewable energy sector, particularly solar power.

In 2023, Variate won a contract to install solar panels in a new solar park being constructed in Raipur, Chattisgarh. For Shrikant, purchasing insurance was no new task - he had purchased many of them covering a myriad of risks from local insurance brokers when he was setting up the business in Pune.

However, as the project commenced, Shrikant realised that Raipur had almost no such commercial insurance brokers on the ground. One of his business partners recommended Shrikant to approach BimaKavach. Their online presence, pan-India coverage and swift digital policy issuance would help cover risks originating in remote Tier 3 towns of India.

Shrikant purchased an Erection All Risk (EAR) policy from BimaKavach for $176. The policy covers losses and damages occurring during the installation of machinery and equipments in factories, installation sites or office premises. Shrikant needed to insure his expensive solar panels (each panel can go up to $1000 depending on their dimensions and quality) that were being installed in the solar park.

While the installation work was in full swing, the skies of Raipur turned gloomy. Dark clouds dotted the horizon, and a torrential downpour soon started. When the skies finally cleared, Shrikant and his team of onsite engineers came out to assess the damage to their panels at the open-air installation site. To their dismay, a few panels had fallen from their installation sites. The damages assessed were to the tune of a thousand dollars.

In his career, Shrikant had never experienced such a loss before. He had no idea how to claim insurance, and the process surrounding a claim. He promptly called up BimaKavach representatives, who notified the insurers, and arranged for a surveyor to visit the site. All throughout the assessment and settlement period, the team at BimaKavach kept Shrikant informed of the progress, and liaised with the insurer to ensure that Variate got as much of their claim reimbursed, as possible.

The entire servicing and settlement process, that too for an incident in a remote town of the country, left a positive impression on Shrikant. He looks forward to a generational partnership with BimaKavach trusting them to take care of the downside protection of his fledgling $3M annual turnover business.